13/08/2010

By Allan Biggar, Founder and Chairman, All About Brands Plc

The traditional media scene is facing unprecedented changes, like few other industry sectors. In the first of two articles for this month’s Fresh Business Thinking marketing newsletter, Allan Biggar, Founder and Chairman of All About Brands plc, a specialist branding and marketing services company, looks at the cause for those changes and reflects on how it’s trying to adapt.

A McKinsey study of the UK media scene indicates that news consumption, largely fuelled by ready web availability, is on the rise. The most intriguing part to this story is that the appetite for news is coming from under 35 year olds. Two-fifths of those in this age group said they felt the need to be the first to hear the news, compared with just 10 percent of people aged 55 to 64.

The need for immediate news reflects, in part, the cultural behaviours of that generation shaped to a very great extent by the extraordinary technological changes in the provision of news and entertainment. In other words, they’ve grown up adopting new technologies which has hastened the speed at which news is delivered. Much is talked about the more demanding behaviours of this generation, but that tends to overlook the curiosity that fuels their appetite for information.

The McKinsey study also looked at how this generation preferred to get their news - an overwhelming preference for news from television and the Internet.

The findings highlight once again the challenges for the newspaper industry. Long term circulation decline and the easy access to news from more immediate information providers is causing pain. While some newspapers are exploring pay-to-view options, this study suggests that only 14 percent of news consumers said they would pay for online content.

Therein is the rub. The biggest issue for newspapers is time. What used to be their biggest advantage of delivering the daily news in the morning or evening has been usurped by “real-time” media over the Internet in a variety of forms. This is what will ultimately kill the need to have something in your hands and to turn the pages. The audience never has wanted “old news” and with the advent of social media tools, traditional newspapers are delivering “old news” in their papers. All this demands a massive shift in business models to ensure continued revenues.

Some newspapers are eyeing differentiated and innovative revenue models for their online content but it’s unlikely that online revenues will be sufficient to compensate for the decline of print.

But one of McKinsey’s findings does suggest a potential revenue opportunity: newspapers appear to have an advantage as they face the challenges of the digital age - trust. Consumers trust newspapers more than any other medium, and 66 percent describe newspaper advertising as “informative and confidence inspiring,” compared with only 44 percent for TV and 12 percent for the Web. This suggests an opportunity for newspapers to go beyond news, to drive reader interest and advertising revenues at the same time. But it may take a smarter man than me to work out how that’s done.

What I would say is that the advertising side is broken. Since readers won’t pay for online news, there isn’t even a glimmer of hope that newspapers can grow their online ad revenue significantly. One option might be for newspapers provide valuable content creation services to their advertisers and pioneer the deployment of this custom content online, but that hasn’t happened, perhaps, because they haven’t worked out how advertising works online and because their traditions won’t permit them to think in this way.

The BBC’s revered John Simpson describes the newspaper industry in the UK as being ‘hapaxanthic’. A botanical term, it implies that newspapers are going through one final, enthusiastic bloom before they die. I agree with him; I think newspapers in the UK are producing, great news, content and commentary. His analogy may be a dramatic one, but I’m sure he’s right.

All About Brands (AAB) is a group of international companies collectively dedicated to building business value for clients through the effective development and management of their brands. To find out more visit www.aabplc.com